Winsway and Marubeni will pay C$10 a share in cash, 112 percent more than its 20-day volume-weighted average trading price, the Calgary-based mining company said today in a statement.

Surging demand from steel producers in China and flood- related supply disruptions in Queensland, Australia, have driven prices for metallurgical coal to record highs this year. Grande Cache, which mines in west-central Alberta, forecast sales of 2.2 million to 2.4 million tons in the year ended March 2012.

"A lot of the larger companies are looking to add coal exposure," John Zechner, chairman at J. Zechner Associates Inc. in Toronto, which manages about $2.5 billion in assets and owns Grande Cache shares, said today in a telephone interview. "I think that companies are realizing the long-term value of the resources in the ground, as opposed to the market, where these stocks have been under a lot of pressure over the last couple of months"

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"Marubeni has had a long-standing business relationship with the corporation," Grande Cache Chief Executive Officer Robert Stan said in the statement. "Winsway is one of our main customers for the Chinese market."

There have been $23.4 billion takeovers of coal mining companies valued at $100 million or more announced so far this year, according to data compiled by Bloomberg. There were $21 billion of deals announced in 2010, the data show.

"This deal looks a bit cheaper than the Walter and Western Coal transaction" based on the purchase price per ton of reserves, Meredith Bandy, a Denver-based analyst at BMO Capital Markets, said today by phone.

Spot prices for metallurgical coal have declined from highs reached earlier this year because of concerns that global economic growth will slow, she said.

Winsway and Marubeni are offering $9 a ton of coal reserves, which is more than the average of $2.91 a ton for comparable North American metallurgical-coal transactions, and less than the $17.86 a ton Walter paid for Western Coal, Bandy said in a note to clients.

The Grande Cache agreement includes a break fee of C$50 million payable by Grande Cache if the deal isn't completed. Winsway and Marubeni will pay C$100 million if they scrap the deal.

February Close

The acquisition, which requires approval by two-thirds of Grande Cache shareholders and a majority of Winsway shareholders, is expected to close in February, according to the statement.

Marubeni didn't respond to calls to its Tokyo headquarters made outside of regular business hours. Calls to Winsway's Hong Kong office, also outside of regular hours, weren't returned.

Cline Mining Corp., a competitor with coal projects in Canada and the U.S., gained 24 percent to C$2.19 in Toronto. SouthGobi Resources Ltd., a miner of Mongolian coal that has a supply agreement with Winsway, climbed 10 percent to C$8.90.